Internet can be a hindrance
INFORMATION Homebuyers these days have easy access to a wealth of information on the internet about the property market in general and targeted areas in particular.
Martin Schultheiss, CEO of the Harcourts Africa property group, says valid information does make buyers’ decisions easier. “Vital statistics about any given area are just a few mouse clicks away and a quick search can reveal current and historical price trends, crime stats, neighbourhood demographics, community services and much more. “However, abundant information may become overwhelming and lead to indecision. In the quest for ever-more information, the search for statistics may become the main objective, leading to consumers missing good buying opportunities.”
He says prospective buyers must keep in mind that statistics may not tell the full story. “Cold figures often do not capture the subtleties of a situation and nothing beats a personal visit to an area to form your own impressions. Current statistics may, for example, misrepresent an area that is showing early signs of renewal and which thus holds the promise of escalating property values. And, as seasoned homebuyers know, getting in early is the key to the biggest gains.”
Positive outlook for house prices
RECOVERY According to the latest results released by ooba, SA’s leading bond originator, indicators continue to point to a positive outlook for the local residential property market.
The oobarometer price index revealed that the average house price rose 6,8% yearon-year in June to R837 599 from R784 427 a year earlier. “House prices are continuing to increase, albeit at a slower pace than in the past few months,” says Saul Geffen at ooba. “We have seen sharp recovery in house prices for the first half of this year with three months of double digit year-on- year house price growth between February and May.” The growth in the average purchase price among first time buyers remains strong, with year-on-year growth of 12,1% in June. “We are seeing a continued easing in lending criteria, which is good news for potential homebuyers and the property market in general.”
The average decline ratio increased marginally in June, up 1,3% year-on-year to 48,8% from 47,5% a year earlier, due to the higher proportion of 100% loans in June. However, on a month-on-month basis the decline ratio fell 4,1% to 48,8% from 52,9% in May. The ratio of applications declined by one lender but approved by another increased 7,5% year on year to 24,8%. “This is good news for homebuyers, as it indicates a higher probability of loan approval from another bank even if initially declined. It also demonstrates the importance of shopping around in securing home loan approval.”
Call to replace ‘voetstoots’ clause
GUARANTEES Looking past the current debate on the “voetstoots” clause in property sale agreements and whether it will still be allowed when the new Consumer Protection Act (CPA) comes into effect later this year, RealNet says there is a simple answer, and that is independent home inspection.
Jan Davel, COO and director of the estate agency group, notes that in the US and UK, a property being sold must pass a home inspection or “appraisal” by an independent, accredited expert in order for the prospective buyer to obtain a home loan. “And although this system was originally introduced to give the lenders peace of mind, a satisfactory appraisal is also of great benefit to the homebuyer — and to the seller, who then doesn’t have to worry about post-sale comebacks from buyers unhappy with their choice.”
He suggests that a similar system should be introduced in SA, where most residential property sale agreements still contain a standard “voetstoots” clause that basically means that the property is being sold “as is” and without any guarantees.
“This clause is seen as being all in favour of sellers, as it protects them from liability for latent or hidden defects, but things are seldom so clear-cut. Buyers can still sue for damages if they believe there was deliberate non-disclosure of latent defects by sellers, and they can and do try other ways to get deals cancelled if they feel cheated.” Lawhill building, left, right next to One&Only Cape Town
Seeff V&A sell the entire Lawhill block
RECORD SALE Seeff has achieved what appears to be another record for SA – possibly the highest priced residential property sale to one purchaser — selling all 30 apartments in Lawhill, the last development in the V&A Marina, for approximately R245m. Two years ago this same branch of Seeff sold Penthouse Three at the One&Only Cape Town for more than R111m.
Said Ian Slot, MD of Seeff Atlantic Seaboard, V&A Waterfront, CBD & City Bowl, said: “Where else would both the highest price ever paid and the highest price ever paid by one person occur in SA, other than in the V&A Waterfront — the jewel in the crown of Cape Town?” Seeff is also managing the letting of the 30 apartments in Lawhill as holiday or corporate short lets.
House your portfolio in investment trust
INVESTMENT STRATEGY Much is said about the necessity of building an investment portfolio in order to ensure a comfortable retirement. However, one of the first things to consider before implementing an investment strategy is whether as an investor you should house the investments in your own name or in a trust.
David Warneke, Tax Partner at Cameron and Prentice Chartered Accountants says that in general, for growth investments a trust is preferable for a variety of reasons. “Purely from a tax point of view, trusts have several advantages over individuals even though the rate of income tax payable by a trust (40% flat rate) is higher than that of an individual (a sliding scale going up to a maximum of 40%). The most important of these is the protection of growth in the underlying assets from the investors’ creditors.”